Seizing the Opportunities for Growth in Wealth Management
We live in an era of rapid and radical transformation. Wealthy clients are more global and more demanding than ever before, want a say in the way they interact with their bank and expect access to a broader network of financial experts.
They want investment excellence – of course – but that alone is not enough. What really drives them are family, business, passion and legacy. Protecting and growing their wealth over generations is their greatest priority. The regulatory environment has changed in many ways, increasing the costs of doing business for both clients and their financial providers. Digitalization is also going to impact every aspect of what we do. These new realities are changing the economies of our industry. Only those who can carve out a particular niche for themselves, or have the global reach necessary to generate scale, will survive.
I believe that the future will offer unparalleled opportunities. Over the next 20 years I expect the leaders in our industry to help more people than ever before to shape richer lives. But only a few will manage to develop a truly global offering and adapt to the new realities of a globalized world. This is the only way to capture the major growth opportunities.
I see a number of major trends affecting the wealth management industry today: clients are changing, regulation is evolving, technology is the great enabler, and scale is essential.
- First, clients. Tomorrow’s client base will be more diverse, with a greater proportion of females, younger, more entrepreneurial and of course, more global. We’re seeing more wealth than ever being created around the world, including a massive shift from the West to the East. There has been a significant shift to countries like China, where there are tremendous growth opportunities for wealth managers with the resources to invest for sustainable, profitable growth. Clients who get the right advice will diversify their assets more broadly and display less home bias.
- Second, regulation. Regulatory change has led to a new capital regime for banks, a great deal more complexity and a much more transparent world. This has huge implications for the cost of doing business and requires us to focus more on advisory services for clients. But it is also a tremendous opportunity for those of us who believe in the value of doing the right business the right way, and have invested accordingly over the last several years.
- Next, technology. The pace of technological change will only accelerate. In a digital age, clients want to interact with their bank wherever they are, and whenever they like. Client advisors will need to have the latest technologies and insights – not just into markets - to complement their expertise and offer the best holistic advice. Networks will become ever more valuable with some wealth managers being able to provide access not only to trusted investment expertise and services, but also to like-minded clients who share similar business interests or passions.
- And finally, largely as a result of the previous three trends, scale will be crucial. Apart from niche providers, only firms who can scale their offering while delivering customized advice and opportunities will ultimately thrive.
So how can our industry take advantage of all these changes?
Doing so will cost money, particularly for large, global wealth managers. We, for example, have invested a substantial amount in a single technology platform that will allow us to enhance the quality of our client advice and deliver unprecedented scalability and capabilities. Both will give us a competitive edge. We have invested heavily in APAC, emerging markets, our European onshore and offshore businesses and in adapting to evolving regulation.
Firms have to broaden their product suite and embed it in a systematic and global investment process to be able to offer solutions in all asset classes, active and passive investment strategies and in all the major national economies. Only an open product architecture can ensure that every client gets the investment solutions appropriate to their own individual circumstances. Most important of all, companies must invest in their people. I'm a great believer that wealth management will remain a people business. While we should ensure we provide client advisors with the latest technologies, we must also give them the freedom to build relationships and create lasting bonds of trust that no machine could ever replace. Above all, wealth managers need to see change not as a threat, but as an opportunity to do an even better job for clients.
We're fortunate that the wealth management industry is still growing at twice the pace of global Gross Domestic Product. However, we all know that past performance is no guarantee of future success. So with change ever-present, the thing we can be certain of is that buoyant growth rates will only continue for those willing to seize change with both hands. For leading wealth managers, it is not about "learning a new sport". It is about a passion for continuous improvement; working hard to adapt, learning and improving our performance, every single day.
Jürg Zeltner is President Wealth Management at UBS